Guinness v Police

[2015] NZHC 883

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CRI-2015-463-26 [2015] NZHC 883

BETWEEN

DIONNE MICHELLE SIDRINA

GUINNESS Appellant

AND

NEW ZEALAND POLICE Respondent

Hearing:	30 April 2015
Appearances:	S Whitehead for the Appellant C Harold for the Respondent
Judgment:	30 April 2015

(ORAL) JUDGMENT OF WOODHOUSE J

Solicitors:

Mr S Whitehead, Public Defence Service, Tauranga

Ms C Harold, Ronayne Hollister-Jones Lellman, Office of the Crown Solicitor, Tauranga

GUINNESS v POLICE [2015] NZHC 883 [30 April 2015]

[1]      The appellant, Dionne Guinness, appeals against a sentence that she pay

$300,000 reparation and that it be paid within 60 days of the date of the sentence. This was for offences of obtaining by deception, altering documents with intent to deceive, and theft by a person in a special relationship.  She was also sentenced to 2 years 6 months imprisonment.   There is no appeal against the sentence of imprisonment.

[2]      In the District Court, Judge Harding imposed the reparation sentence even though the appellant, as he recorded, appeared to be “hopelessly insolvent”.   The sentence was imposed in an expectation that this would be likely to force her into bankruptcy and, as a result of this, the two companies who were the victims could prove in the bankruptcy.

[3]      The appellant submits that the Judge’s decision was founded on a material error of law in respect of provable debts.  The law is that an order or sentence of reparation is not a provable debt under s 232 of the Insolvency Act 2006.   The appellant submits further, and as a result, that the sentence is contrary to the Sentencing Act  reparation  provisions  –  the  reparation  order  would  cause  undue hardship to the appellant and is manifestly excessive.  The respondent, through Ms Harold as counsel, agrees with the main thrust of the submissions.

[4]      As I have already indicated in discussions with counsel, I also agree with the primary points made on appeal.  It is nevertheless necessary adequately to explain why for at least two reasons.  One is that an appeal cannot be granted simply because counsel are in agreement.  The appellate court is bound to assess the matter on its merits.   The second reason is that the effective owner of the two businesses, Mr Black, is in Court and he is entitled to a full explanation as to why the order made in the District Court is not sustainable.

The offences

[5]      I will briefly outline the offending.  It is a very brief outline.  The appellant was employed by two related companies.  Her duties included financial matters such as banking and payment of bills and receipt of payments into the companies.   In August 2014 the companies discovered discrepancies.   It was established that the

appellant had, by various means, stolen over $350,000 from the companies over an extended period of time.  There is no doubt that this was serious offending, and a gross breach of trust given the position the appellant had with these two companies.

[6]      The appellant pleaded guilty at an early stage to 11 charges covering the offending.

The District Court decision

[7]      The only part of the District Court decision that is directly relevant is the reasons the Judge gave for the reparation sentence.  He discussed this as follows:

[11]      I turn to consider the question of reparation.  I have referred to the scale of your offending.  The reparation report refers to the fact that you own a  home  purchased  to  the  cost  of  $340,000,  mortgaged  to  the  extent  of

$270,000.  It is claimed that it is leaky and currently worth some $240,000 to

$300,000 but there is simply no adequate material before the Court to enable me to accept that bald assertion.

[12]      You are said, in the report, to say that because you intend to study you will be earning little and not in a  position to repay until you have completed studies and gained employment. The perception that you have the right to improve your position at the cost of your victims is sadly awry.

[13]      Reparation ought generally not be ordered if it is unachievable and the higher Courts have from time to time commented on the undesirability of large amounts of reparation where there are lengthy sentences of imprisonment.  This is not in my view a lengthy sentence of imprisonment. On your material provided to Community Probation you are presently hopelessly insolvent. You have no equity in your home and you say that you owe over $110,000 in other matters.  If that is the case bankruptcy is proper and inevitable.

[14]     Recognising that in reality it is most unlikely that any substantial reparation will be achievable it still seems to me inappropriate not to make a substantial order.   The chances of recovery are slim but an order made requiring payment within a short time will require the realistic assessment of matters and will enable the victims to prove in bankruptcy should that be the end result.  It is inappropriate to contemplate you retaining a house with the potential of equity against the scale of your theft.  I do not regard that as just in any way.

[15]      In the circumstances I propose that, on a global basis, you be ordered to pay reparation of $300,000 recognising that that is not the total amount stolen but also that the payment of even that is likely to be doubtful.  That is to be paid within 60 days.  I recognise also that that is unlikely to happen but it will however force the proper consideration of your financial position and the  division  between  those  who  are  entitled  to  funds  of  that  which  is available.

The sentencing concluded at that point with imposition of the sentence.

Reparation report

[8]      A reparation report was provided, although it appears that some matters were not investigated to any significant extent.   The information as provided did demonstrate that the appellant was insolvent, or, at the very least that seemed fairly clear.  The probation officer was provided with information indicating that her home had an estimated value on an agent’s appraisal of $240,000 to $300,000.  I note that this was less than the value provided by QV, which was an estimate of $397,000. The Judge did not refer to the QV valuation.  There was a mortgage of $272,000 as noted by the Judge. The appellant’s total indebtedness was put at some $407,000.

[9]      In  terms  of  assets  and  liabilities  the  information  was,  as  I say,  that  the appellant was insolvent, or close to insolvency.  In terms of income, at the date of sentencing I can only assume that she was unemployed.  Counsel advise that at that point she was in custody awaiting sentence.

Discussion: debts provable in bankruptcy

[10] The rationale for the order made, both as to quantum and the 60 days to pay, is what the Judge said at [14]. In essence, the terms of the order were seen as a means of seeking to force the appellant into bankruptcy. It was hoped that this could produce some money for the victims, although the Judge himself recorded that the prospect was “slim”. A further reason was that this would be likely to force sale of the appellant’s home. I was advised by counsel that the summary of facts records that the conveyancing costs for purchase of the property, during the period of employment, were met from money stolen from the companies. There does not appear to have been information before the Court indicating whether the equity put into the property by the appellant came from stolen money, but these uncertainties certainly do not assist the appellant.

[11]     The legal foundation for the Judge’s decision was that the victims could prove in bankruptcy as parties entitled to receive reparation.  As already recorded, this was an error of law.  Section 232(2) of the Insolvency Act 2006 provides that a sentence of reparation, amongst other things, is not a debt provable in a bankruptcy. The same section provides that a liability to pay reparation is not discharged when the bankrupt is discharged from bankruptcy.

Discussion: reparation under the Sentencing Act 2002

[12]     This error of law of itself provides grounds for allowing the appeal, but for reasons I have already noted it is appropriate to consider the other main ground. This is whether the reparation imposed in terms of the amount, and the order for payment within 60 days, is contrary to the Sentencing Act 2002.  As outlined in the summary at the beginning of this judgment, the respondent agrees with the broad thrust of the argument.   But there was a difference between the appellant and the respondent as to whether the outcome should be to quash the order for reparation altogether, or remit the matter back to the District Court to reassess the question of reparation. At the beginning of the hearing Mr Whitehead, for the appellant, advised that the appellant conceded that the proper course is to refer the matter back to the District Court.   I agree that that is the proper course.   But again, I do need, for reasons also noted at the beginning, to explain my reasons for concluding that the order cannot be justified having regard to the relevant provisions of the Act and having regard to decisions of the Court of Appeal and of this Court.   In all the circumstances I will cover these matters to a reasonable extent.

[13]     Under s 12 of the Sentencing Act, an order that will cause undue hardship cannot be made notwithstanding that the Court is otherwise lawfully entitled to impose an order under Part 2 of the Sentencing Act.  The relevant provisions in Part

2 are those contained in ss 32 to 38.  These are sections which set out general criteria for determining whether the Court can make an order at all and, if so, the terms of the order and related matters.

[14]     In  my judgment  the order would  cause undue  hardship.   This  is  not an assessment based on some abstract principle dependent on a subjective assessment of

the Judge.   It is based on the provisions of the Act and decisions of the Court of Appeal, binding on this Court as well as the District Court, together with other decisions of the High Court.   It is also not a conclusion based on a weighing of respective interests of the victims and the offender.  In essence, it is plain on all of the information that was available to the District Court, and available to this Court, that the order imposed would result in an impossible financial burden for the appellant.  It was an order she simply could not comply with. And it is plain enough that  it  was  likely that  it  would  produce  very little,  and  quite  possibly produce nothing, for the victims.   With all due respect to the Judge, the rationale in legal terms for the order is wrong.  This is what I do need to expand on.  I will note the names of some cases and provide citations in the transcript.

[15]     Undue hardship means more than ordinary hardship.   It is hardship greater than the circumstances warrant.1    Orders which cannot possibly be met should be avoided.2   The amount to be repaid by way of reparation should be realistic given the financial resources of the offender.3   Where there is no realistic chance that payment will be made within a few years an order should not be made for the full amount sought.4

[16]     Section 35 of the Sentencing Act allows the Court the flexibility to tailor sentences to meet the financial capacity of the offender.5    The Sentencing Act does not specify any period, or maximum period, during which reparation is to be paid.6

But a Court should not bond an offender for long periods.7    Generally, where the

reparation will not be paid within 5 years, either in instalments or otherwise, the order  will  cause  undue  hardship.    This  accords  with  s 86(2)  of  the  Summary Proceedings Act  which  provides  that  extensions  of time for repayment  of fines cannot extend beyond 5 years after the date on which the extension was arranged.

Instalments beyond 5 years have been regarded as inappropriate.

1      Hunt v Police HC Wellington AP232/99, 29 September 1999 at 7.

2      R v Brown CA267/92, 26 November 1992 at 5

3      R v Bailey CA306/03, 10 May 2004 at [25].

4      Ruka v Department of Social Welfare [1997] 1 NZLR 154 (CA) at 156.

5      R v Pender [2007] NZCA 465 at [15].

6 Ibid, at [17].

7      Crosland v Police [2012] NZHC 1929 at [8].

[17]     It is relevant to refer, in a very summary way, to the facts of some decisions:

(a)      In Vea a reparation order of $27,450 was considered excessive and replaced by an order for $13,000 to be paid at $50 per week.8

(b)      In Scanlan a payment period of 53 years for reparation of $138,172 at

$50 per week was replaced on appeal with an order for reparation of

$13,000 to be paid at $50 per week from the date of the offender’s

release from prison.9  That resulted in a 5 year payment period.

(c)      In Crosland an order of some $48,772 at $50 per week for a domestic purposes beneficiary was considered excessive.10   It would have taken her 19 years to satisfy the order. An order was made on appeal of $30 per week for 5 years.

(d)In  Leighton  an  order  of  reparation  of  $40,700  was  imposed  for payment over 5 years.11    Mr Leighton was on an emergency benefit. The order was quashed and replaced with an order for $10,500 to be paid over 5 years at a rate to be arranged with the District Court Collections Unit, but with an expectation of $40 per week.

(e)      In  Hawken  (No.  2)  an  order  to  pay  reparation  of  $120,000  was quashed on appeal with no substituted amount imposed because of the offender’s inability to pay the sum.12

[18]     Other cases that may be noted without summarising the detail are: Pender,13

Donaldson,14  Bailey,15  Vallily,16  and Creek.17     I do note that the last two cases involved payments over more than 5 years.  In Vallily it was an order for payment

8      Vea v R [2014] NZHC 1959.

9      Scanlon v R [2013] NZCA 502.

10     Crosland, above n 7, at [14].

11     Leighton v Police [2012] NZHC 1925 at [11].

12     R v Hawken (No 2) CA307/05, 21 June 2006 at [7].

13     R v Pender, above n 5, at [29]-[30].

14     R v Donaldson CA227/06, 20 August 2006 at [43]-[44].

15     R v Bailey, above n 3, at [23]-[25].

16     R v Vallily CA251/04, 10 November 2004 at [75].

17     R v Creek CA199/06, 7 August 2006 at [11].

over 8 years.  The appeal in that case was on a point of law and the Court of Appeal could not intervene but reservations were expressed about the amount to be paid and the length of time.  In Creek the period of payment was 9 ½ years but the Court of Appeal again expressed reservations.

[19]     It is plain that in this case reparation of any material amount would have to be paid by instalments.  An order cannot be made which is impossible to comply with. That is contrary to the provisions of the Act and the principles from the cases I have referred to.  It also brings the administration of justice into disrepute.  The order in this case would be impossible to comply with.   There was no prospect of paying

$300,000 within 60 days and in fact that impossibility was part of the reason for the order.  But if an order was made for payment by instalments, even at $100 per week, it would take 57 years to repay the full amount.  And this could not commence until the appellant was released from prison.  At that point it is to be assumed she would be unemployed, although perhaps in receipt of a benefit.  It is to be noted that she is now aged 42.

[20]     It is for all of these reasons that I am satisfied that the reparation sentence must, as a matter of law, be quashed.

Disposition

[21]     I am satisfied, also as earlier indicated, that the proper course is to remit the matter back to the District Court for reassessment of the question as to whether there should be a reparation sentence and, if so, the amount of reparation and the terms upon which it should be paid.

[22]     I further direct pursuant to s 251 of the Criminal Procedure Act 2011 that a further reparation report be provided pursuant to s 33 of the Sentencing Act.  In all of the circumstances, it is appropriate that the officer providing the report make full enquiries to establish as accurately as reasonably possible the value of any assets owned by the appellant together with the amount of her debts.  In respect of debts, enquiries should be made as to whether the creditor is likely to seek repayment.  I refer, for example, to a debt the appellant says she has to her parents.  That may very well be a debt that has been forgiven.  It may not be a debt that could have priority

over a liability to pay reparation.  There are other debts in respect of which enquiries as to the terms of repayment may be justified.  For example, there is a student loan. In any event, in the interests of the two companies from whom all of this money has been  stolen,  and  in  substance in  the interests  of Mr Black  and  his  family,  full enquiries should be made.

[23]   In relation to the appellant’s current financial circumstances I note Mr Whitehead’s advice that the appellant has now received a default notice under s 119 of the Property Law Act 2007 from the bank holding the first mortgage over her property.  This records default in payments of instalments between December 2014 and March 2015 totalling $4,918.95, an overdraft excess of $2,787.06 and an unpaid premium for insurance of the property in a sum of $1,404.89.  The total owing as recorded in the default notice is $7,706.01.  The appellant was required to pay that sum together with costs to remedy the default.  It seems reasonably likely that the bank will proceed to a mortgagee sale.

[24]     I also direct that the appellant provide an updated statement of financial capacity under s 42 of the Sentencing Act.   This should be supported by relevant documentary evidence supporting the various matters recorded in the statement.  In requiring the provision of supporting documents I do recognise that the appellant is in prison and there may be some difficulty in obtaining documents, but every reasonable effort in the circumstances does need to be made to obtain supporting documents.

[25]     There are orders and directions accordingly.

Woodhouse J